Insurance group Britam has issued a profit warning for its 2018 financials, stating that its earnings will be at least 25 per cent lower compared to the year before.
The Nairobi Securities Exchange-listed firm now expects a maximum net profit of Sh395.5 million in the review period, down from Sh527.4 million recorded in the year ended December 2017.
In a public notice made through a letter to the NSE, Britam has blamed the impending profit drop to the performance of the stock market which it says has led to reduced returns from equity investments.
The firm has also blamed “the challenging operating environment (business environment) which has adversely affected its business. “The expected decline is mainly due to the performance of the stock market which has led to reduced returns from our equity investments; and the challenging operating environment which has adversely affected the business,” Britam said in a statement.
“The expected decline is mainly due to the performance of the stock market which has led to reduced returns from our equity investments; and the challenging operating environment which has adversely affected the business,” Britam said in a statement.
Britam Holdings Plc offers financial products and services in insurance, asset management, property and banking in Kenya, Tanzania, Uganda, Rwanda, South Sudan, Mozambique and Malawi.
The management however says the company is making progress in executing its 2016-2020 strategy.
“The board and the management are optimistic of a better and more stable operating environment and believe that the business will perform better in 2019,” the firm said in the statement released on Wednesday.
Factors seen to affect Britam include investments in HF Group and Equity Group in a year that saw the Nairobi bourse end on a bear run.
NSE lost 17 per cent on market capitalization for the year 2018 to close at Ksh2.1 trillion compared to Ksh2.5 trillion posted in 2017.
Other companies that issued a profit warning last year include HF,Sameer Africa, Kenya Power, Bamburi Cement, Mumias Sugar, and Sanlam. Deacons and Athi River Mining were placed in receivership, while Uchumi, which has not released its results, is facing similar action by creditors.East African Portland Cement, which lost a suit by its former workers for a Sh1.4 billion payout, has sunk further into negative territory. It needs a Sh15 billion rescue plan. Blaming its problems on a tough year, Kenya Power also issued a profit warning and later posted a Sh1.9 billion net profit, a 74 per cent plunge from what the company reported in 2017.
About 23 firms reported losses or a drop in earnings in the year as majority blamed their dismal performance to a “challenging business environment.”